A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

You're assuming that middle income should be able to afford it. Remember that in the end, the cost of a good will is a measure of the availability of a good in relation to the desire of people to want that good. If goods are not available due to natural scarcity, there will not be a price at which middle income earners can afford it.

A lot of people who go by Elliot Wave analysis are saying this a Wave 3 of 5 down, as in after this sudden downturn ends there will be a Wave 4 bounce up, for not exactly sure how long - a week? a month? 3 months? but then another downturn, a wave 5, that will take us lower than the bottom of Wave 3 (what we are in now).

So after this panic, a brief sigh of relief, then another panic, driving everyone from fear to despondency.

Our depression will be characterized, weirdly, by a stagnant economy where some prices are crashing and certain commodities rise out of sight. Most people, including our leaders, will not know what to make of it.

Some people will jump off buidings, drug usage will increase, crime will go UP. There will literally be lots of crying, initially.

After a while we will revert to a world where actually knowing something, knowing 'how' to do something and actually 'doing' productive things will become important again. These will become important, respected people in our communities.

Dammit Keith, this is not a panic. Deleveraging, revaluing assets, establishing proper risk premiums, bitch slapping gamblers... these are market forces acting properly. That they are all happening nearly simultaneously is just semi-random chance.

I was in boarders book store the other night and there were a few people browsing and like NO employees...I thought goodness if bad business doesnt kill em the shoplifters sure will...Then I went to find this book because the computer said there was a copy, and to my great suprise IT WAS MISSING...probably got ripped off!

Good question on gold. Now ask yourself what it takes to go out and buy physical incarnations of the royal metal. If people actually start taking delivery on the futures market, it will spike like mad. Otherwise, I'd sit tight and watch it get hammered like everything else. More than 99% of the gold market never comes in contact with the physical metal.

It reminds me of the spread between prime and libor rates. Joe Six Pack borrows from the bank, not the fed.

I used to put the odds at a depression at about 5%, but I am afraid we are at the 50% point of a true 1930's depression. . .possibly even worse, because at least in the last depression, US still had factories. . .if we started a WPA to rebuild the US infastructure, we would have to import most of the equipment and steel from China and Korea. . .not good. . .

Keith, there's no question that we're in full panic mode, and the problem is worldwide. Iceland wins the sweepstakes for total disruption, but others are sure to follow. There's going to be enormous wrenching changes, but it isn't the end of the world. One good thing at least will be that we will never see another mania for thoughless deregulation of the financial system again in our lifetimes.

Most likely. Or, perhaps the realization has come that the deflation scare will be lasting. Any bets on gold/silver ratio at 100 or gold/platinum ratio at 1? These "industrial" metals don't even seem to share the safe-haven status with gold.

> Or manipulation heading into the G7 post-Bretton-Woods meeting this weekend?

After the panic is over, either McCain or Obama will be buying up the formerly 700,000 houses for full price and then handing them to the janitors and others who are currently living in them. They won't be using their own pocket money to do it though.

I have been a loyal HousingPANIC reader for a little over 3 years now. I have never posted before. If you just started reading the blog and checking out the comments I have this little tidbit to share.

IT'S LIKE LOOKING INTO A FUCKING CRYSTAL BALL!

Every prediction (with the current exception of Angelo Mozzillo's arrest) has come true.

What happened to all the gold bugs?Are they shitting themselves too?what you see is a classic rush for the exits.these are the best times to buy if you have any balls at all.I know alot of you are so whipped by your wives that you will probably sell too.You will be buying the same stocks from me for 50% more next year.But that is the way you like to play the game, buy high and sell low.That is why there are a small number of millionaires.

HP'ers if there's been one great piece of news for most of us its that the dollar has rallied big-time in this flight of fear

I can't tell you how nice it is to finally get a break over here

But... that's got me thinking. Of course, it's stupid that the dollar is gaining in value as we print trillions more

So, when the G7 meets this weekend, and they're saying a new world monetary alignment may arise (post post bretton woods) - what is the chance that the US dollar suffers a massive devaluation within days?

As in, overnight, with no warning?

Also, you have Italy saying they're talking about shutting all the markets worldwide - no access.

Yes, there will be things that the middle income earners cant afford (as always), but homes, cars, stocks, and the majority of the stuff purchased by middle income earners will be reasonably priced. Yes, there will be alot of middle income folks that will become poor during this cycle, hence, they will not be middle income any longer.

If you look at the distribution of income, these are the people that sustain the economy. Hence, prices will almost always be priced for these folks.

Inflation???? I wouldn't even dare mention the word. Let's just say that the FED would love to see inflation here. I thought we had concluded that we were in a deflationay period!!!

Hot-But-Cold, you will soon see those homes in the upper 100s, trust me.

You f**kers screwed yourselves. Now you point the fingers at us, like you were just an innocent by-stander. You knew payback was coming, so shut the f**k up.

You created your own bubbles, and bought our CDS, CDO, SIV, you name it, crap, greedy bastards. Now you will pay. Not only are you already feeling the pain, but brace for the worst. You are 1 year behind the US, so if you think you've had bank failures, you have not seen anything yet. You will get alot more of those. So stop pointing the finger at us and deal with it.

Considering what happened to gold in the 1930s, why is everyone in the U.S. convinced it's a store of value? If the Great Depression really does repeat itself, expect the government to knock on your door and force you to sell your gold on pain of death for $100/oz. or less (last I checked it was going for about $860). They may even take the wedding rings off your finger this time around. That may be a reason why gold isn't rising as some here might expect; if Benjamins ($100 bills for those outside the U.S.) really do become worthless, don't expect to have your gold long enough to spend it.

I don't know how long the panic is going to last, but we're quickly approaching if not already past a tipping point. If a bottom in fact happens by the middle of next week, the world may remain generally OK after a couple of tough recession years. After that capitalism as we know it will continue on, though with new regulations in place and people will remain pretty risk-averse for a generation or more.

If next week is anywhere near as bad as this week around the world, before all is said and done some major cities in the world will suffer what Hiroshima and Nagasaki went through in August 1945. The world will literally never be the same, and at least several hundred million will end up dead worldwide. Like World War II, war won't happen immediately; Germany did not start open hostilities for nearly 10 years after the U.S. stock market crash. Already the European central banks are at each others' throats, and the U.S. will become involved in the melee by the beginning of next week. Barring a quick solution, the shouting match will escalate to government versus government in the coming weeks. This then will be followed by diplomatic measures and economic measures, escalating to full-scale war.

The G7 countries better have a damn good plan. Absent a clear plan to prevent a full-scale collapse of the financial system. It's one thing for companies to go bankrupt or for people to lose what's in their 401(k). When businesses and people can no longer write and cash checks, credit card transactions are no longer processed, and hard currency is no longer available from the government or banks, then the world as we know it ends.

We are in panic. The only questions are: 1) How long will it last, and 2) What does the world look like after the panic is over?

1) When there are no more sellers left. Time wise, equities panics only last a very small time. Days. Volume spike will be proof.

2) Those holding enough CASH before markets well off will be king. On a very short term basis, CASH has not been destroyed much. LONGER term, if the central banks world wide do not withdraw the liquidity they injected just after post panic stabilization occures, a Jim Rogers "inflation holocaust" will be the unintended consequence.

Re: Gold correlates to fear. And fear only. After the market stops plunging and stabilizes, GOLD will fall off a clff. Fear will be replaced by Despondency. The market may be anticipating that stabilization and GOLD plunge now.

You dont have to guess now which occurs. Just watch the leading indicators.

This you can count on : just after stabilization, your USD CASH underperforms, one way or the other. Now that your asset allocation has been nearly 100% cash for 1 year, get ready to change that big time!

(CNN) -- House Democratic leaders are putting together a second economic stimulus package costing as much as $150 billion and are likely to call Congress back shortly after the election to vote on the measure, according to several Democratic leadership aides.

I see nothing but strength for the USD in the short and long term here, with minor pull backs. Just think about it, we were bad (US), but I think they were way worst. Plus the EU will desintegrate during this sucker. Emerging markets are a mess, and to me that looks very attractive for the USD. It seems to me that everyone is trying to dump dollars to save their currencies, but this seems to have a negative effect on their currencies anyway. As you already know, the only currency that's better than the USD is the Yen.

I am cautious on the dollar, but if I had to choose 2 currencies, I would choose the USD and the Yen here. The Yen carries alot less risk and way more upside potential here as well.

You people (republicans) are the scary shit. Can you get any scarier than Bush and Cheney, you racist bastards. Stop complaining!!!, you should be more scared right now with your idiot president bush (and the economy on free fall). How much worst than Bush can Obama be , and how much worst can it get?? Why don't you spill the beans and let us know right here, on this board.

I donated for your tip jar but still think you are wrong on America we will come out of this. I lost quite a bit with Apple 1 month ago and today bought back shares at a price I have not seen in some time and I think I will recover my original loss and there are many stocks at very good prices if you look. This stress will end prices will climb and people who bought now will be thankful they did in 1 year.

Look on the bright side. We've just solved the Social Security problem because now 15 millon boomers who planned on retiring in the next 10 years can't because of their 401K and IRA and instead will be working and paying into the system rather than drawing money out of it.

As far as Medicare goes they can go it at 65 whether they are working or not, but if their employer is providing their healthcare they may not sign up for medicare and that will help the problem there too.

Sure. First they manipulate down gold and silver in the morning, then take a lunch break and proceed with rescuing the DJIA by 15:00. This conspiracy theory is so dull that, if I were to provide a better explanation, I'd suggest that someone has just come back from lunch and felt more optimistic to buy stocks being energized with caffeine. :) Not that I actually believe these "patterns" to be suggestive of anything.

I think from Panic to Capitulation will last a few more months. Still a lot of disbelievers out there - in Las Vegas, still a ton of Hummers and other exotic machinery out there. After the Panic, more folks will give up the all-is-fine-act, we'll see more reality...people knocking on the door asking to do odd jobs; probably more hotdog carts, less fans at sporting events. I don't expect the wave of foreigners coming to buy their piece of the US with their money because they're just as bad off as we are and they can't stand our gutts. Therefore, the world will look like little ol' me buying Ca real estate cheap with cash.

On 06 October 2008, the working group issued a statement indicating that it was taking multiple actions available to it in order to attempt to stabilize the financial system, although purchase of stock shares was not part of the statement.[12] The government may wind up owning shares in the firms it has provided loans to, as they will receive warrants as collateral for these loans.

On the morning of 10 October, 2008, the Dow lost nearly 700 points. This was in contrast to most of the week, during which the market had rallied early only to face a massive sell-off near the closing bell. At 3:00 EST, the market hovered around 8,100, about 500 points off. An abrupt rally occurred without explanation, and the Dow went as high as 8,742.71 before going back into the red. Many experts attributed this abrupt and brief rally to the manipulations of the Working Group."

Embrace the insanity. Buy an index etf at close to even for the day, and turn around and sell for quick profit. Did it twice today, almost got stuck with it at the close but I am making money on this panic. Not a way to make a living, but IMO the market is going to bounce violently around these levels from today. I'm not going long until S&P at 800 or things stabilise a bit.Also very happy to be entirely in cash right now, but uncle ben and papa henry are trying to f*ck that up.Its crazy that hyper-inflation and deflation are still on the table.

Today, I eard Mr Bush tell us we will hit the bottom when home prices are stabilized. I don't see that happening anytime soon. Furthermore, housing bubbles are just beggining to pop all over the World. The banks aren't saved yet.

Keith, I really don't get your strategy. You've spent most of your time and dollars in London, when the pound and the euro were at their highest. That was a huge waste of money, which you could have used to buy a nice flat in Buenos Aires for $40k USD when Argentina crashed, for instance. You blew all in overspeculated rent in London and trips while the euro was in the moon.

I'm just waiting for the euro to drop to $1 USD to start traveling to Europe again. I lived in Paris when $0.60 USD = 1 Euro. Hell, I'm even going to Iceland to see what I can get for pennies on the dollar.

expats are expats because we left to go where there was max economic opportunity, or cultural intrigue. Or a place where we could tolerate living (unlike America under Bush/Cheney). There are millions of us.

Capiche?

That said, it's nice to be holding dollars when the pound and euro are collapsing. Opera tickets are now 1/3 off.

For the week, the Dow fell just over 1,874 points, or 18%, its worst weekly decline ever on both a point and percentage basis. Wall Street lost roughly $2.4 trillion in market value during the week, according to losses in the Dow Jones Wilshire 5000, the broadest measure of the market.

"homes in my area (zip 85048) are still in the upper 200's when they should be in the upper 100's, inflation is rising, and the cost of gas is high."

My response, if you look at http://www.city-data.com/zips/85048.html

The median household income is around $75,000. And median home prices are around $260,000. That means the price to income ratio is 3.4. If income holds steady, then you need a 13% drop from current levels to bring that ratio down to the historic average of 3. That means prices need to drop 37% from their peak. It looks like they already dropped about 25%. And it seems that in every metro area like Las Vegas, Washington DC, Phoenix, etc that the median prices need to drop a total of 35% to reach their

i bought in today 10 minutes before the closing bell. Went back into a tech stock that i had held for many years and just sold a month ago. it was down 40% from that day. just got my feet wet; didn't buy too much of it.

almost went for a penny stock of a mortgage lender i've been following for a long time. it was hitting a floor at 18 cents bid. i set it all up in my account but at 3:58 i decided i just couldn't hit the submit button. i'm brave but i guess not that brave!

i would recommend buying in this market ONLY if 1) you are very familiar with a stock and 2) you can afford to lose 25% of your investment (i'm assuming that's the most the market could crater in one day and after that you cut your losses and sell).

oh, and as for whether we are at panic, i'd say a qualified yes. there are a lot of people in 401Ks who are despondent but not in panic because they have a long time horizon. i'd say those who are closer to retirement are definitely in panic.

i think we'll have a rally or two over the next few weeks or months and then i think we'll crater again.

the more the feds try to fix things the more i think they undermine peoples' confidence. this is clearly evident from the last few weeks and how the market's reacted to new announcements from the feds. i think the more drastic the measures they take, like buying equity in banks, etc. it will hit home with people that things are really, really bad. but it will take time for it to really sink in.

also, if obama wins the market is going to TANK BIG TIME.

so, bottom line: some false rallies over the next few months, perhaps even some significant ones. and then cratering back to 8k or lower. we could even go lower next week but my feeling is the feds will do something aggressive to prevent that.

No way would I day trade! In my experience, dollar-cost averaging works just the way it's supposed to.

I think it was Warren Buffet who said something like you should only sell if something about the company's story changes, and it was a part of the story that made you want to buy the stock in the first place.

I think Cisco is a good company with a brand that is recognized worldwide. I thought their acquisition of Linksys was a good move. I bought from $15 down to sub-$10, held through the 20s and 30s, and am buying more now.

I'm losing on oil tankers, but oil needs to keep being shipped so I am holding.

I'm also holding all my JP Morgan. JPM is holding up so far, and I bought all my shares cheap during the gold derivatives scare a few years ago.

You win some, you lose some. I just try to win more often than I lose, and learn from my mistakes.

Considering what happened to gold in the 1930s, why is everyone in the U.S. convinced it's a store of value? If the Great Depression really does repeat itself, expect the government to knock on your door and force you to sell your gold on pain of death for $100/oz. or less (last I checked it was going for about $860).

Re: Gold correlates to fear. And fear only. After the market stops plunging and stabilizes, GOLD will fall off a clff. Fear will be replaced by Despondency. The market may be anticipating that stabilization and GOLD plunge now.

And where was all that fear as gold tripled from 2001 to 2008? Don't give me 9/11. Gold barely budged in the days after that event.

I wonder how many stocks are bought on margin (loans). When markets fall 5%+ in one day, investors are faced with numerous margin calls. There's no time to be picky on what stocks should be kept. Everything and anything must be sold to raise cash. That goes for gold and oil.